E-Mini: Profit Taking Likely for Day or Two

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Emini daily chart

• S&P 500 Futures profit taking likely with Emini having a strong rally into the month close last Friday.
• The Emini is Aways In Long and likely going higher. However, Friday was a climactic bar which will increase the odds of Emini profit taking and going sideways for a day or two.
• There is a bear trendline (blue line) just above, and the market will probably have to reach it in the next couple of days.
• The market formed a bear flag with the March 13th low and March 22nd high. The bulls want a measured move of the flag, which projects up to around 4,300.
• Some bears will see the August 16th high as the major lower high in the bear trend on the daily chart. The December 2022 high and the February 2023 high failed to lead to a new low (below October 2022), so some bears will see them as minor Lower Highs in a bear channel.
• This means that the bears may try to form a wedge top with the December 2022 high and the February 2nd high.
• The risk the bears face here is that the bulls have a possible double bottom (December 2022 low and March 13th low). Next, the bulls will want an upside breakout of the neckline (February 2nd high) and a measured move up, which projects to 4,600.
• Overall, traders should expect Emini profit taking likely today, which means the market will probably have a lot of trading range price action today. This means today will probably not close as another big bull trend bar.

Emini 5-minute chart and what to expect today

• Emini is down 6 points in the overnight Globex session.
• Since last Friday was a strong climactic rally, there is a 75% chance of sideways last two hours beginning before the end of the second hour. There is a 50% chance of follow-through buying on the open and the market going sideways for two hours. Low probability of another bull trend day lasting all day.
• Traders should expect the market to have a lot of trading range price action today. This means that traders should be patient and assume most breakouts will fail.
• As I often say, most traders should wait for 6-12 bars before placing a trade unless they are comfortable with limit order trading.
• There is greater than an 80% chance of a swing trade on the open beginning before the end of the second hour. The swing trade often forms a credible stop entry after forming a double top/bottom or a wedge top/bottom. This means a trader can wait for one of the patterns mentioned above to form before placing a trade and have a reasonable chance at catching a swing trading lasting at least ten bars and two legs.
• Overall, traders should expect a lot of trading range trading today as the bulls take partial profits after last Friday’s climactic breakout.

Friday’s Emini setups

Emini 5-Min Chart

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